For those who’ve never purchased a home before, taking the time to understand how the process works is extremely important. Otherwise, you’re not going to know where to start or what steps to take next. Applying for a home mortgage loan is typically a high priority.
The following guide will help you on your quest to securing the right mortgage.
When shopping for a mortgage, first determine you’re ready to buy a home, connect with a knowledgeable real estate agent, pay attention to interest rates, and learn about the different loans available.
Determine You’re Ready to Buy
Purchasing a home is a huge commitment. It therefore requires plenty of thought and strategizing. As discussed in a 2016 Forbes article titled "7 Warning Signs You're Not Ready To Buy A Home," there are several factors that can help you determine whether you’re ready to buy a home or not.
According to the piece, these include salary, debt, savings, employment stability, credit, type of home, and future geographical plans, among others.
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“Most mortgage lenders like to see that you’ve been working the same job for at least two years," it states. “They calculate your average income based on your job history for the last 24 months. Being on the job that long shows certain stability, and changing jobs or having an income gap signals insecurity.”
Those who don’t think they’re going to be living in the same area for long might want to reconsider buying, the article continues:
“Unless you’re pretty sure that you’ll want to stay in the area for the next three to five years, you’re not ready to buy.”
Connect With a Real Estate Agent
Working with a real estate agent is advantageous. Not only can they educate you about the home-buying process and help you find a home in a neighborhood within your budget that fits your needs, they can also connect you with other industry professionals, including appraisers and mortgage lenders. These recommendations can save you a lot of time and frustration.
As discussed in our previous post about qualities of a good realtor, putting the client first, having excellent negotiation skills and being proactive are among the best characteristics a real estate professional can possess—whether on Long Island or anywhere else.
Pay Attention to Interest Rates
Interest rates fluctuate depending on the mortgage lender you obtain a loan from. Consequently, paying attention to interest rates as you contemplate buying a home is essential.
The federal Consumer Financial Protection Bureau (CFPB) talks about this subject in a 2017 article titled "Seven factors that determine your mortgage interest rate."
These seven factors include:
1. Credit Scores
2. Home Location
3. Home Price & Loan Amount
4. Down Payment
5. Loan Term
6. Interest Rate Type
7. Loan Type
Learn About the Different Loans Available
There are several types of mortgage loans home buyers can apply for. These include conventional loans, Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans, among others. Learning more about each option, including requirements and stipulations, is important. As aforementioned, receiving recommendations from a trustworthy real estate professional is a good place to start. This way, you won’t have to shop for a mortgage on your own.
Contour Mortgage has been providing various loans to home buyers since 1993. Contact us today to learn more about our services.